Semtech Corporation (NASDAQ:SMTC) Q1 2021 Earnings Conference Call - Final Transcript

May 27, 2020 • 05:00 pm ET

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Semtech Corporation (NASDAQ:SMTC) Q1 2021 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Greetings and welcome to Semtech Corporation's First Quarter Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded.

I would now like to turn the conference over to your host, Sandy Harrison, Head of Investor Relations. Thank you. You may begin.

Executive
Sandy Harrison

Thank you, Devon and welcome to Semtech's conference call to discuss our financial results for the first quarter of fiscal year '21. Speakers for today's call will be Mohan Maheswaran, Semtech's President and Chief Executive Officer and Emeka Chukwu, our Chief Financial Officer. A press release announcing our unaudited results was issued after the market closed today and is available on our website at semtech.com.

Today's call will include forward-looking statements that include risks and uncertainties that could cause actual results to differ materially from the results anticipated in these statements. For a more detailed discussion of these risks and uncertainties, please review the Safe Harbor statement included in today's press release and in the Other Risk Factors section of our most recent periodic reports filed with the Securities and Exchange Commission.

As a reminder, comments made on today's call are current as of today only and Semtech undertakes no obligation to update the information from this call should facts or circumstances change. During the call, we will refer to non-GAAP financial measures that are not prepared in accordance with Generally Accepted Accounting Principles. Discussion of why the management team considers such non-GAAP financial measures useful along with detailed reconciliations of such non-GAAP measures to the most comparable GAAP measures are included in today's press release. All references to financial results in Mohan's and Emeka's formal presentations on this call refer to non-GAAP measures unless otherwise noted.

Also, beginning this quarter, we will be reporting our business under three end markets compared to the four previously, which we believe better reflects the ongoing consumption of our products. We have combined what was previously our enterprise computing and communications end markets together to form the infrastructure end market while our high-end consumer and industrial end markets are largely unchanged.

With that, I will turn the call over to Semtech's Chief Financial Officer, Emeka Chukwu. Emeka?

Executive
Emeka Chukwu

Thank you, Sandy. Good afternoon, everyone. For Q1 fiscal year '21, the net sales decreased 4% sequentially and increased 1% over the prior year to $132.7 million, which was above the midpoint of our guidance. In Q1 shipments into Asia represented 80% of net sales, North America represented 12% and Europe represented 8%. Total direct sales was approximately 22% of net sales and sales to distribution was approximately 78%. Our distribution business remains balanced with 40% of the total POS coming from the infrastructure end market, 34% from the industrial end market and 26% from the high-end consumer end market.

Bookings increased strongly over the prior quarter and resulted in a book-to-bill significantly above 1. Turns bookings accounted for approximately 34% of shipments during the quarter. Q1 GAAP gross margin declined 20 basis points to 60.9% due to lower absorption associated with COVID-19 shutdowns